The residence nil rate band (RNRB) is worth £175,000 per person in 2026/27 — on top of the standard £325,000 nil-rate band. A couple can combine their allowances to shelter up to £1,000,000 from Inheritance Tax when passing the family home to children or grandchildren. Here is how it works and how to make sure your estate claims it.
RNRB at a Glance: The Key Figures for 2026/27
| Allowance | Amount |
|---|---|
| Standard nil-rate band (per person) | £325,000 |
| Residence nil rate band (per person) | £175,000 |
| Combined individual threshold (with RNRB) | £500,000 |
| Combined couple threshold (both NRB + both RNRB) | £1,000,000 |
| IHT rate on amount above threshold | 40% |
| Taper begins (estate over) | £2,000,000 |
What Is the RNRB and How Does It Work?
The residence nil rate band was introduced in April 2017 to reduce IHT on family homes passed to direct descendants. It operates as an addition to the standard nil-rate band — but only applies to the value of a qualifying residential property.
If your home is worth £300,000 and your RNRB is £175,000, the remaining £125,000 of property value is covered by your standard NRB. The RNRB does not “stack” on top of assets other than the residence — it is specifically tied to the property.
What counts as a qualifying residence?
- Your main home at any point (not just at the time of death)
- A home you lived in and later let out
- A home you moved out of (e.g. into care)
- A property you downsized from after 8 July 2015
Who are “direct descendants”?
- Children (biological, adopted, step-children, foster children)
- Grandchildren, great-grandchildren
- Spouses and civil partners of the above
Siblings, nieces, nephews, friends, and charities do not qualify.
Worked Example: How the RNRB Saves Tax
Without RNRB: David, widower, dies with an estate worth £700,000 — including his home worth £400,000 — which he leaves to his two children.
- Standard NRB: £325,000
- Taxable estate: £375,000
- IHT: £375,000 × 40% = £150,000
With RNRB:
- Standard NRB: £325,000
- RNRB: £175,000 (home passes to children)
- Total threshold: £500,000
- Taxable estate: £200,000
- IHT: £200,000 × 40% = £80,000
- Saving: £70,000
Couples: Claiming Both RNRBs
When a spouse or civil partner dies first and leaves assets to the surviving spouse, IHT is not charged on that transfer (spousal exemption). The unused RNRB is preserved and transferred to the survivor.
Example: Margaret and Philip’s estate
- Margaret dies first, leaving everything to Philip. Her RNRB goes unused — 100% transferred.
- Philip dies later with an estate of £1,200,000 (including their home worth £500,000), leaving everything to their daughter.
- Philip’s NRB: £325,000 + Margaret’s transferred NRB: £325,000 = £650,000
- Philip’s RNRB: £175,000 + Margaret’s transferred RNRB: £175,000 = £350,000
- Total threshold: £1,000,000
- Taxable estate: £200,000
- IHT: £80,000 (instead of £350,000 without the RNRBs)
The £2 Million Taper
For estates above £2,000,000, the RNRB is reduced by £1 for every £2 over the threshold.
| Net estate value | RNRB available (individual) |
|---|---|
| Up to £2,000,000 | Full £175,000 |
| £2,100,000 | £125,000 |
| £2,200,000 | £75,000 |
| £2,350,000 | £0 |
The taper uses the net estate value after deducting liabilities — so outstanding mortgages, legitimate debts, and funeral costs reduce the estate value before the taper applies.
Downsizing: You Don’t Have to Own a Home at Death
If you sold your home or downsized after 8 July 2015 and no longer own a qualifying property at death, you may still claim a downsizing addition — provided the proceeds (or assets of equivalent value) pass to direct descendants.
This prevents people from being penalised for moving to a care home, sheltered housing, or a smaller property. The claim is made on form IHT435 within two years of death.
How to Claim the RNRB
The RNRB is claimed on:
- Form IHT435 — for the RNRB on the estate
- Form IHT436 — for transferring unused RNRB from a deceased spouse or civil partner
Both forms are submitted as part of the IHT400 estate return. Solicitors or professional executors usually handle this, but executors can do it themselves.
For straightforward estates below the combined threshold with no IHT to pay, a formal claim via IHT400 is still needed if assets exceed the Excepted Estate threshold.
Common Mistakes to Avoid
| Mistake | Consequence |
|---|---|
| Leaving the home to a sibling or niece | RNRB not available — full estate above NRB taxed at 40% |
| Not claiming transferred RNRB from first spouse | Overpaying IHT on second death |
| Forgetting to claim downsizing addition | Missing allowance when property was sold pre-death |
| Estate above £2M — not reducing liabilities before taper | Taper may wipe out RNRB unnecessarily |
See our inheritance tax jointly owned property guide, taper relief on gifts, and inheritance tax guide.